How Law Can Define Craft Brewing By Hectolitres

An interesting post today by Jordan about the best part of a week spent exploring good beer in the western Canadian province of Alberta. I was particularly interested in his description of the minimum requirements set out in law by the government which I am going to repeat here in a bit more length than usual:

...the barrier to entry is simply too high for there to be a rush to very small micro breweries or nano breweries. The way that licensing works in Alberta is that a Class E license (the one that lets you make beer) has a certain number of requirements, which I’ll quote here from the Licensee Handbook:

A Class E licence may be issued to a qualified applicant to manufacturer liquor in Alberta. The manufacturer must meet the following production requirements, with production capacity minimums met within 18 months of start-up:

Now, this is truly interesting and goes a long way to explaining why you only have eleven breweries. 5,000 hl of beer doesn’t seem like a huge amount of beer, until you realize that it’s 500,000 litres. That is to say that you have to be able to make a million pints of beer a year within 18 months of starting up. Additionally, all of your fermenters have to contain at least a thousand litres and you need at least enough of them to make five thousand litres a week. Even given those conditions, five thousand litres a week puts you at about half of your minimum annual production capacity, so you’re really talking about much larger scale equipment.

That is an one onerous commitment and one that essentially, as Jordan explains, means you have to have a sugar daddy with deep pockets on the team from the get go or you are planning to leave that province to start your start up if you are a young brewer with more dreams than cash. There may be reasons to regulate the industry in this manner. The swift expansion of new breweries in Ontario, for example, may well be a precursor to as rapid a retraction when customers move on for one reason or another - if each new brewery actual ever earns the customers in the first place. Ontario's application for new manufacturers of beer seems more focused on business plans and financial responsibility.

But is that really the process? One of the handy things about the English tradition of parliamentary democracy is that one little word - Hansard. The official record of the dealing of the legislature is there in public to be searched and studied. When we look see we find the following:

⇒ In 2012, the Newfoundland and Labrador government discussed the implementation of a class of craft brewery that produces " less than 5,000 hectolitres or approximately 120,000 dozen bottles of beer per year";

⇒ In Canada's largest province of Ontario in 2009, the legislature heard of the then 40 breweries in the province which contribute between 15% and 20% of the jobs of the Ontario brewing industry and produce about 300,000 hectolitres of beer annually" or 7,500 hectolitres each on average; and

⇒ In the late 90s, there was a special category over in the Province of British Columbia by Canada's Pacific coast for breweries under 75,000 hectolitres. In 2012, B.C. had a category of taxation upon brewing for operations under 15,000 hectolitres.

So if all these provinces are trying to find ways to particularly assist the smallest of breweries, why does Alberta bar them? Little PEI out by the Atlantic provides for a category of brewery producing under 2,000 hectolitres as does our national system of Federal excise tax on small brewers. And look, in 2007, one of Ontario's cornerstone craft brewers, Beaus', was only forecasting sales of just 1,000 hectolitres (100,000 litres) in their first year of operations. Even with their family's prior manufacturing experience, it is unclear to me that they might have taken the chance to jump over an initial minimum scale of production of multiple times that scale.

So what is it about Alberta that the threshold for small scale brewing is rather big compared to most every other part of Canada? One of the sayings that gets kicked about the law is the one about "no mischief, no law." What is the error in the community that needs addressing though raising the bar to entering the craft brewing industry so high that only those with large investments need apply? One reason might be the development of what is described as mid-sized brewers. This creates tensions with both the brewers who are both larger and smaller. Well established mid-range brewer Big Rock 220,973 hectolitres in 2011. The Hansard for Alberta shows questions related to tax and brewing capacity has been raised in the legislature back in 2002. But that does not explain the mischief. Is it cultural or in the trade? Or just habit. More research may well be in order.

Maureen Ogle said this about the book: "... immensely readable, sometimes slightly surreal rumination on beer in general and craft beer in particular. Funny, witty, but most important: Smart. The beer geeks will likely get all cranky about it, but Alan and Max are the masters of cranky..."

Ron Pattinson said: "I'm in a rather odd situation. Because I appear in the book. A fictional version of me. It's a weird feeling."

Comments

Here's a great article on the challenges inherent in the Alberta brewing industry and another about a change in tax policies that affect the mid-sized brewers .

The AGLC is in the process of possibly rewriting the Class E category, to make it more accessible for entrepreneurs; but it hasn't been properly changed in about 35 years (with the exception of the addition of the Class E Cottage Winery category).

To allow new, smaller breweries in Alberta, the AGLC will have to work harder to monitor and govern policies because of the increased number of breweries, but lower-volume producers don't pay as much in taxes. So for the Alberta industry to become more inviting to smaller breweries, the AGLC will get more drudgery for less commission. Not a great mix to encourage policy change.

For the record, there is a subclass in Class E for Brewpubs, which has no minimum production, just a 2HL minimum capacity for the vessels. But they are not allowed to distribute, and the beer produced can only be sold for direct-to-consumer off-sales and on-premises consumption. Obviously, the trade of the pub itself would dictate the volumes of beer that actually need to be brewed.

30 years ago, Alberta had a fraction of the population, and was the oil and gas workhorse of the country. The workers mostly drank beer that was cheap, because they didn't really care to pay for more complex beers. So when the manufacturer licenses were being written, the only producers in the province were big macro brewers; why bother including contingencies for smaller systems? The history of the prairie provinces is written in the legacy of their brewing policies.

It's not only Alberta that has antiquated brewing industry policies; it just happens to have a strong economy, and the young professionals with an inclination and financial ability to spend on more expensive craft brews. But yes, AB is a pretty tough nut to crack, when it comes to breweries.

Excellent reportage. Pretty sure the licenses could have been updated at any point over the last 30 years but here are those brew pub rules. You do need to have a fifth of the capacity and weekly production. Why do they care what you produce in a week? Interesting that you cannot brew more than 10,000 hectolitres or about 200,000 pints.

Alan is apparently a Gen X-er who has hit 40... err...44... err... 45... YIKES... 46 ... [ZOW-WEE!!] 48... jessh, now 51... and edits and writes about other stuff at his personal website Gen X at 40. Please email Alan or any of the authors at this blog's gmail account - please write if you want to join the ranks of authors of this site or just want to send in a story on your favorite beer or photo of your regular pub.

I have moved the content of the OCB Commentary Wiki here. It is now a static document and pretty much is locked in as understandings existed as of 2012. Probably needs its own wiki to update the content! Below are the original introductory remarks:

"The purpose of this wiki is to collectively make comments, add annotation, identify errata and suggest further sources to the text of The Oxford Companion to Beer. Members are asked to avoid comment about the authors, the structure of the text or other extraneous matters. This wiki is a not for profit project that reviews the text pursuant to the concept of "fair dealing for the purpose of criticism or review" under Canadian copyright law." Alan McLeod, wiki Organizer, and chief bottle washer at A Good Beer Blog. Motto? "Many hands make pleasant work." Alan McLeod, 25 October 2011. Please provide some information about yourself when making a request to join the wiki. Anonymous requests for membership will not be approved. Overly ardent and rudely put claims to authority will be cause for removal from the membership. As of 11 January 2012, 134 entries or 12.2% of the total of 1,100 received commentary, many with multiple comments. Eight of the photos have been corrected as well. That number rose to 151 by 13 May 2012.